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Item Description – Brookfield Square Among Mall Operators Filing Bankruptcy After COVID-19The COVID-19 pandemic shook many industries, especially those that were already struggling to survive. Even before the 2020 global pandemic, traditional malls were not having an easy time. Popularity waned as more people chose online shopping. Over 8,600 retailers announced closings by November of last year. Credit Suisse published a report in 2017 that predicted the closure of 20% to 25% of malls by 2022.It was labeled a “retail apocalypse” by some, with anchor stores shuttering their locations. These vacancies left large mall spaces unused and caused a reduction in the foot traffic needed to generate revenue for the neighboring businesses.The Washington Post published an article last year, highlighting the millions of dollars that mall operators were investing in reinventing themselves. This push for renewal widened the gap between the haves and have-nots among malls.Employee Abdul Mannan described his experience on the clock at a jewelry kiosk inside the Lakeforest Mall in a Washington suburb. He remained at his post for two hours without interacting with a single customer.Malls that still had the resources tried to invigorate public interest by adding a lifestyle element with medical clinics, yoga studios, microbreweries, and upscale shops. This also had the effect of damaging the prospects of poorer malls that didn’t have the funds to invest in themselves.Managing director of research at GlobalData Neil Saunders stated that “There is an accelerating polarization between the ‘best’ and the ‘rest.’”“Newer, nicer malls have become magnets for consumers, pulling them away from struggling properties.”Photos have circulated on the web showing eery images of empty malls with their once-bustling storefronts and kiosks standing still and empty.The brought on by mandated shutdowns and social distancing restrictions may have been one last nail in the coffin of the traditional mall.2 Mall Operators File for BankruptcyThe predictions made in 2019 were dire without the added weight of a global pandemic. Two more mall operators filed for bankruptcy this week. Pennsylvania Real Estate Investment Trust and CBL & Associates Properties Inc. have joined many other businesses in the search for solutions amid growing debt and falling revenue. Malls continued to decline after temporary closures earlier this year as shoppers stopped visiting or did so less frequently amid infection concerns. Mall tenants felt the pressure as revenue dropped, making it harder to keep up with the rent payments that support the malls their businesses live in. Some mall tenants already filed for bankruptcy, including anchor department stores like J.C. Penney.CBL manages 107 malls across the United States. The company reported that over 30 of its tenants have already filed for bankruptcy and will be closing. That includes , and other stores in CBL-operated malls. In Wisconsin, CBL runs East Towne Mall, West Towne Mall, West Towne Crossing, and Brookfield Square.CBL Properties is based in Chattanooga, Tennessee. Most of its mall locations are positioned on the eastern half of the U.S. however they also have operations near San Diego, California and El Paso, Texas. CBL stated that their malls will remain open for business as they work through bankruptcy proceedings.Pennsylvania Real Estate Investment (PREIT) is based in Philadelphia. Their official website claims that the company owns and operates over 22.5 million square feet of retail space.PREIT was founded by Sylvan M. Cohen in 1960. It was among the first companies to earn REIT status.CBL Properties and PREIT join other businesses that can’t keep up with the current economic conditions.In August, a court-appointed a receiver to manage finances of The Outlet Shoppes in Oshkosh, Wisconsin after Buffalo-based Wilmington Trust filed a lawsuit for missed mortgage payments. According to the lawsuit, BFO Factory Shoppes LLC hasn’t made mortgage payments since March 2019. The payments were being made toward a $54.7 million loan that it obtained in 2015 to pay for the mall and other properties. Immediate payment of the outstanding $52 million was demanded during foreclosure action in July.2020 Holiday Shopping May Be Throttled for MallsNovember and December are usually peak season for many retailers. This year may not look as good for malls.According to the National Retail Federation, consumers spent over $687 billion during November and December of 2017. Sales were expected to rise the following year, with some retailers relying more heavily on their holiday season revenue.This year, retailers face more challenges with many trying to climb mountains of debt. Shipping and supply challenges plague retail as more people turn to online ordering. Businesses have to get creative to find new ways to connect with their customer base during a time when people are more reluctant to leave their homes.The holiday shopping season usually kicks off on Black Friday, however this year, retailers started pushing deeper discounts in mid-October. A survey conducted by the deal finder website RetailMeNot found that 40% of respondents said they plan to shop early because of concerns about product availability and holiday shipping times.As COVID-19 cases start to rise in many communities, brick and mortar shops may begin to suffer even more if they don’t find ways to accommodate customers. Many have implemented curbside pickup as an alternative. While this works for standalone locations, it’s more complicated in a mall setting where many shops operate in a shared space.There is a possible ray of sunshine for retailers that also sell online. RetailMeNot’s survey found that 66% of respondents plan to spend more than they did last year while shopping at home.Among retailers who participated, 86% also believe that shoppers will spend more than last year while 88% were optimistic that they will generate more revenue overall during this year’s holiday season.Online ordering may be the key to survival for many businesses in 2020. Curbside pickup also works but presents many challenges for malls.“Think about the physical design of a conventional enclosed mall,” explains Greg Portell who is lead partner with Kearney consulting firm. “It’s a large, enclosed space whose very layout acts as a barrier to easy access.”Anchor stores and larger retailers will have less trouble because they tend to have entrances built-in with nearby parking. However, the smaller businesses inside the mall will have a tougher time.“If a mall has over 200 retail tenants and most are inside of the mall, you can’t have 200 spots for each of them for curbside pickup,” stated Steiner + Associates CEO Yaromir Steiner.“You also need people to pick up customers’ purchases from the stores and then bring it to the customer at curbside. All this infrastructure has to be organized.”While online is essential, curbside has gained traction among consumers since the pandemic started. “Our data shows 4 in 10 shoppers actually tried curbside pickup for the first time since March, and nearly two-thirds of shoppers say they plan to use curbside in the future,” said Kantar consulting director Rachel Dalton. “Curbside pickup is absolutely here to stay,” she explained. “There’s no question about that. So it’s important for malls and retailers to find creative solutions to offer it, especially as sales pickup for back-to-school followed by the holiday shopping period.”What Will the Future of Malls Look Like?As businesses look for ways to continue operating, one thing is for certain. The pandemic has likely changed the face of malls for years to come. Some may find ways to adapt that becomes the norm while others may fade into obscurity in favor of standalone big box stores and online retailers.We most likely haven’t seen the end of bankruptcy filings as 2020 winds down. The holiday shopping season may help breathe new life into a suffocating sector, but will it be enough to keep many of our nation’s malls alive?will continue to monitor retail bankruptcies. Check back for updates on the status of the industry and the 2020 holiday shopping season.